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Retail Round Up - 09th May

by Keri Link May 10, 2012

​Sainsbury’s experiences healthy hike in profits

The UK's third largest supermarket chain posted a 7.1% rise in profits today beating city forecasts for a 5% rise.

The supermarket published its full-year results this morning with underlying profits hitting £712m for the year to March 17th.
This strong performance continues the momentum reflected in its fourth-quarter trading update, when like-for-like sales grew by 1.8%.
“We believe that Sainsbury’s has cranked out a very good performance in 2011-12,” said Clive Black, analyst at stockbroker Shore Capital.

Shop price inflation drops as commodity prices fall

Shop price inflation fell to 1.3% in April from 1.5% in March but the British Retail Consortium (BRC)- Nielsen Shop Price Index flagged potential future increases following the UK’s fall back into recession.

BRC director general Stephen Robertson said: “After last week’s official return to recession, these figures give customers some reasons to be cheerful. Fuel, utilities and even stamps are much more expensive than they were but retailers are holding back or actually cutting prices.
“Food inflation dropped to where it was before March’s sudden rise and non-food goods have now been cheaper than a year ago for three months in a row.”

DIY spending plunges to 15 year low last year

Households spent £7.8bn on DIY last year, down 17% after allowing for inflation on 2010’s £9.4bn figure, according to Retail Week. Spending in the sector is not even half the level of the £15.5bn spent at the peak of the housing boom in 2004.

The decline has hit both tool and material sales according to the research, as real expenditure on tools and equipment dropped by almost a fifth.
The wet weather over the Bank Holiday weekend is likely to have hit sales for DIY and garden retailers such as B&Q and Homebase.

John Lewis mulls store openings in China

John Lewis is looking at opening stores outside of the UK and is considering China as a potential location.

Chairman Charlie Mayfield said he is attracted by the rate of growth in the country, particularly because of the economic challenges in the UK but stressed that there were no firm plans in place to open stores there at the moment. John Lewis, which operates 39 stores in the UK, expanded online into Europe last year but at present does not have any stores outside the UK.
The retailer reported that fashion sales for the 13 weeks up to April 28 were up 6.6%, bolstered by sales of men’s outerwear.

Start-up to rival Cadbury (after two-year wait)

The great-granddaughter of Cadbury's founder is finally set to launch her own chocolate brand, two years after first announcing plans to rival the Kraft subsidiary.

Felicity Loudon has found a buyer for her £30m home after a two-year hunt, meaning cash for the launch of the new chocolate brand is now in place.
“I’m not going high-end [with the launch], which is what everybody thinks I’m doing,” she told the Birmingham Sunday Mercury.
“I want it to be affordable. I want it to be quirky. I want a child to want to buy it. I want it to bring out the child in you. I want to get away from additives. Everything about it, apart from the cocoa bean, has to be British.”

Morrisons revamps ice-cream and frozen desserts ranges

Morrisons is this week relaunching its own-label ice cream and frozen desserts ranges.

The new Mor ice cream range consists of 19 flavours, of which eight are new, as well as 24 types of ice lollies, sorbets and frozen yoghurts. New flavours include Salted Caramel & Crunchy Hazelnut and Peanut Butter.
“Purchase in the ice cream category is often driven by new and exciting flavours and products – something we kept front of mind when developing the new lines,” said Morrisons strategic brand manager Charlotte Dewhurst.
Let's hope the weather gives us cause to enjoy these frosty treats.

Mars signs Eva Longoria for global ad push

Mars has signed Desperate Housewives star Eva Longoria to front a global campaign that repositions its Sheba range as a brand that appeals to the emotional rather than the nutritional value.

Sheba will continue to be aimed at women and it is hoped the tie-up with Longoria, along with her high profile status in the media as a cat lover, will differentiate the brand advertising from rivals such as Purina.
Mars is using the campaign to boost brand awareness in the pet food market, which grew by 18% between 2006 and 2011 to reach an estimated £2.7bn in the UK according to research business Mintel.

Ann Summers targets older women

Ann Summers is hoping to use its Sex Census, in partnership with relationship charity Relate, to gain more credibility with older women in the latest phase of its brand overhaul.

The partnership, and findings from the survey will be promoted in Ann Summers stores, parties, online and though a PR campaign.
Ann Summers and Relate partnered in December to launch the survey, expecting around 4,000 respondents. It attracted 24,000 in the course of the poll. It claims that during the five-week survey, engagement on its Facebook page increased 320% and ‘Likes’ doubled.

HMV confident on return to profit

The music retailer is hoping that changes to its business strategy, including a focus on technology, digital and games, will mean a return to profit next year, despite continued losses this year.

It made a bigger than expected loss of £16m last year, which HMV says reflects a weak schedule of new release albums and DVDs.
Progress in its strategy to boost its sales of technology and electrical alongside music and film content has given “encouraging” market share growth in recent weeks, according to CEO Simon Fox.
HMV also hopes to capitalise on the disruption to rival Game and increase its share of the gaming market. It has already ramped up marketing in this space to attract customers from its rival.

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